Examining Combined Energy Efficiency and Renewable Energy

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Examining Combined Energy Efficiency and Renewable Energy Standards

2011 ACEEE Energy Efficiency as a Resource Conference

Denver, Colorado

Jenny Heeter (Sumner)

September 26, 2011

NATIONAL RENEWABLE ENERGY LABORATORY

Outline

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BackgroundTypes of Standards and Policy OverviewHow much EE do states allow? How much is being used?What is the price of EE?How is EE tracked in RPS polices?What implementation challenges exist?Conclusions


Background

States have increasingly developed renewable portfolio standards (RPS).

29 states, DC, and Puerto Rico have RPS standards in place; 8 states incorporate EE into their RPS standards.

There has been some movement at the state and federal level towards Clean Energy Standards.

– 2010 - President Obama mentions in State of the Union Address.– March 2011 - Senators Bingaman and Murkowski issue white

paper.– It is unclear whether a federal clean energy standard would include

energy efficiency. – Challenging to pass a CES at federal level currently.

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Types of Clean Energy Standards

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• Each state RPS policy is unique.• CERES

» Combined Efficiency and Renewable Electricity Standard.» Includes EE/DSM.

• CES» Clean Energy Standard» Can include some forms of coal generation, natural gas, or

nuclear energy. (Eg. MI, OH, PA, WV)» Currently, all states that allow non-renewables also allow

EE.» This presentation will not focus on non-renewables issues

other than EE.


Combined vs. Separate EE Standards

• Many states also have a separate Energy Efficiency Resource Standard (EERS). EERS polices require a certain percent or amount of energy efficiency to be implemented by utilities by a given year.

• EERS policies impact RPS implementation; reducing the amount of total electricity sales through an EERS will subsequently reduce the amount of renewable energy needed to comply with the RPS.

• This presentation focuses on the current implementation of EE in RPS polices, and will not focus on EERS policies.

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State Policy Overview

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RPS + EE (date enacted)

RPS + EE + Non-RE

(date enacted)Connecticut

(1998)Indianab

(2011)Hawaii a

(2002/2004)Michigan

(2008)Nevada

(1997/2005)Ohio

(2009)North Carolina

(2007)Pennsylvania

(2004)West Virginia

(2009)

a Hawaii's Energy Efficiency Portfolio Standard (EEPS) will not be separate from the state's Renewable Portfolio Standard (RPS) until January 1, 2015. Rules have not yet been established for the EEPS.b Renewable portfolio goal (not required).

States

allowing EE

and non‐RE

Source:

NREL (September 2011)

States

allowing

EE


EE Allowed Contribution to RPS

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CT HI MI NV NC OH PA WV

Overall

RPS target27% by

202040% by

203010% by

201525% by

2025

12.5%

by 2021

for IOUs

25% by

2025~18% by

202125% by

2025

% EE

allowed in

RPS

4% of

retail

sales in

2010 ‐

2020.

≤50% of

RPS

target

through

2015.

≤10% of

target≤25% of

target

≤25% of

target

for

IOU's

≤50% of

target

10% of

retail

sales in

2021

(~55%

of RPS

target)

No min.

or max.

Separate tier for EE/alt. energy

CT – Separate tier for EE, represents ~29% of RPS target in 2010, ~15% in 2020.NC – Coops and munis have a 10% by 2018 requirement, with no limit on how much EE can contribute.PA – Separate tier for EE, represents ~63% of RPS target in 2010, ~55% in 2021.


Background on EE Cost in RPS

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EE can lower overall RPS implementation cost (Mahone et al 2009, EIA 2009, Cappers & Goldman 2010, Brown et al 2007).

– The cost of implementing energy efficiency is typically less than the cost of procuring renewable energy (Brown et al 2007).

– Cappers and Goldman (2010) modeled the financial impact of various energy efficiency business models on ratepayers. In all scenarios, moderate and aggressive energy efficiency implementation reduced total ratepayer bills.


How Does EE Price Compare to RE Price?

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EE credits in Connecticut are consistently lower price than Tier I (renewable energy) credits. 2011 saw higher Tier I prices (mid/high $20s in summer 2011, compared to ~$10 for Tier III.


Price of EE and Non-RE in Other States

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State Price of Energy Efficiency Metric

Connecticut $10‐$25/MWhPrice of energy efficiency credits

(EECs) within CT’s energy

efficiency tier, 3/2009‐8/2011

Michigan $13.25/MWhWeighted average energy

optimization cost

EE price is less than RE, though not many states have published data.


Energy Efficiency Used in RPS Through 2010

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The amount of EE being used in RPS is rising, due to increased overall targets and new compliance obligations. Nevada is projected to meet 25% of RPS target with EE through 2015.


Percent of RPS Being Met with EE

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StateAmount of EE used for

compliance (2010)Percent of RPS target

Connecticut11,882 thousand MWh

registered certificates

~20% of total registered

certificates(less than allowable ~29%)

Hawaii 916 thousand MWh~92% of target

(exceeded allowable 50%)

Nevada1,944 thousand MWh actual,

but only 843 thousand MWh

allowed

~57% of target(exceeded allowable 25%)

Pennsylvania1,387 thousand MWh

(non‐RE)~63% of target

(matched allowable)

1 Connecticut has not issued a compliance report, however, certificates registered in NEPOOL GIS provide a preliminary estimate of the magnitude of EE being used.


Existing REC Tracking Systems

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EE Tracking

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EE typically tracked through REC tracking systems; states are responsible for M&V.

CT EE and conservation certs. tracked through NEPOOL‐GIS

HI No tracking

MI Energy Optimization Credits tracked through MIRECS

NV Portfolio Energy Credits tracked through NVTREC

NC Energy Efficiency Certificates tracked through NC‐RETS

OH EE and DSM credits ‐PJM‐GATS and M‐RETS

PA EE and DSM credits ‐PJM‐GATS

WV EE and DSM credits ‐PJM‐GATS


EE Implementation Challenges

RPS administrators may need to coordinate with other agencies.

e.g. Connecticut and Hawaii have existing central third-party EE implementation

Measurement and verification can be more challenging for EE than for renewable energy. In PA, only 18 EE/DSM projects are currently registered, compared to 6,636 RE projects.

EE trading is limited to Connecticut market, some trading of PA Tier II credits; market is not developed.

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Conclusions

Competing EE against RE will lead to lower RE adoption; NV and HI are developing more EE than maximum standards allow.

Cost of EE is less than cost of Tier I RECs.

Differences between federal and state policy:– Federal level: Provides additional resource in order to ensure

that all states have ability to meet standard at least cost.– State level: May want to guarantee the amount of EE and

amount of RE by implementing separate standards.

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NATIONAL RENEWABLE ENERGY LABORATORY 17

Thank you.

Contact information:Jenny Heeter

National Renewable Energy [email protected]

303-275-4366

mailto:[email protected]

Examining Combined Energy Efficiency and Renewable Energy

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